US defence ties come with cash-back guarantee

Australian firms schmooze for military profits, reports Marian Wilkinson in Washington.

While President George Bush is on his way to Canberra, a select group of executives from Australia's high-tech and defence companies will be networking at a cocktail party in Washington, trying to capitalise on the deepening military alliance between the two countries.

Mr Bush might have embarrassed John Howard when he joked that the Prime Minister was a US sheriff in the region, but his characterisation was accurate, and in Washington the players from defence contractors to Pentagon planners know this sheriff's role will mean big dollars in defence spending and tough political decisions for Australia.

Among those decisions are whether the US will ask for new bases in Australia, whether Australia buys into expensive "missile shield" defence technology and just how big a slice of some large military contracts will go to Australian companies. None of these questions will be resolved during Mr Bush's 23 hours in Canberra, but they are, as one official put it, the critical backdrop for the historic visit.

The decisions will be driven by Mr Howard's conviction that Mr Bush is right about where the security threat to Australia and the US lies and how to respond to it. That threat, in Mr Bush's view, is from terrorists and rogue states who may get hold of weapons of mass destruction. As one Australian official put it, for both leaders terrorism and proliferation are the twin threats - "the nightmare is the convergence of the two".

US and Australian officials stressed that because Mr Howard shared that view, Australia was increasingly playing a central role in carrying out US security policy in the Asia-Pacific region.

Since the Bali bombing, Australiam and US forces help train counterterrorism troops in the Philippines, Australian Federal Police and the FBI work with Indonesian police investigators and Australian intelligence helps track terrorists cells from Thailand to Manila, working closely with the FBI and the CIA.

Mr Howard's decision to join Mr Bush's pre-emptive war on Iraq also supercharged the military co-operation with the US. And despite Mr Howard's decision not to send peacekeepers to postwar Iraq, Australia remains committed to the Iraq occupation.

As one Australian official pointed out, Australia still has a ship stationed in the Persian Gulf. In Iraq it still has a P3 aerial surveillance team, a C130 transport team, a commando unit in Baghdad, air traffic controllers and 15 or more intelligence and weapons specialists attached to the search for weapons of mass destruction. Australia is also supporting the reconstruction of Iraq's agricultural sector.

As Mr Bush arrives in Australia, the big picture on military co-operation between the US and Australia is being debated in both countries.

One US official explained that what America wanted was flexibility and capability throughout South-East Asia but there were very few options. "We don't have a lot of access to the region compared with other areas", the official said, "and yet our forces have to travel through that region to get to the Middle East."

Other than Japan and Australia, America's two dependable allies in the region, there are few options for the stationing of US units.

Australian officials say there is no proposal right now for a new basing agreement, but there are talks going on. "It's a global picture. It's complex. It's still early days," said one.

The problem, of course, is that any country, including Australia, that agrees to such an arrangement becomes part of any conflict initiated by Washington. But basing is just one contentious issue.

The tougher decisions will be about the multibillion-dollar defence equipment Australia buys and how well it fits with US war planning. Three big items are being weighed up: the costly American Abrams tank that could replace the old European Leopards, the new US joint strike fighter aircraft and, most controversial, new air-warfare destroyers with anti-missile technology that could lock Australia into the US missile defence shield.

In each of the big decisions, the Howard Government is pushing the US for substantial contracts for Australian companies if we buy in.

"A lot of work is under way to make sure our defence industry can share in the production of any major equipment we buy from the US," said one official

The ship-based missile defence system was raised by the Pentagon's chief global security strategist, J. D. Crouch in Canberra last July. At the time, Mr Crouch stressed the contracts Australian technology companies could get from the decision.

But critics say the system is of dubious value to Australia, which faces little threat from a weapon launched on a ballistic missile.

The main reason for buying in would be to support the US in operations against, for example, North Korea or Iran.

"It's a question of balance, of regional as opposed to global," said one Australian official.

That argument comes down in part to how important the US alliance is to Mr Howard and what Australians are prepared to pay to be the US sheriff in the Asia-Pacific.